Principal Commissioner Of Income Tax-Ii, New Central Revenuebuilding, Statue Circle, Jaipur (Raj v. M/S Rajasthan State Mines And Minerals Ltd., C-89

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 48/2019 Principal Commissioner Of Income Tax-II, New Central RevenueBuilding, Statue Circle, Jaipur (Raj) ----Appellant Versus M/s Rajasthan State Mines And Minerals Ltd., C-89-90, Lal KothiScheme, Jaipur. PIN/GIR No. AAACR7857H ----Respondent For Appellant(s) : Mr.Anuroop Singhi withMr.N.S.Bhati andMr.Aditya KhandelwalFor Respondent(s): Mr.Prakul Khurana HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE MANEESH SHARMA 03/04/2025 Order 1.This appeal is filed under Section 260A of the Income TaxAct, 1961 (for short ‘the Act’) against the order dated 12.11.2018passed by the Income Tax Appellate Tribunal, Jaipur (for short ‘thetribunal’). 2.The appeal was admitted on 06.02.2020 on followingsubstantial question of law:- “Whether on the facts and in the circumstancesof the case, the Tribunal was justified in allowingdepreciation or amortization of mining land and leasehold land of Rs.4,70,33,366/- treating the same ascapital expenditure ignoring the provisions of Sections 32 and 35D(2) of the Income Tax Act, 1961, which was not even claimed by the assessee in theoriginal return of the income and the return was notrevised within time, which is contrary to the ratio laiddown by the Supreme Court in ‘Goetze India Ltd. Vs.CIT’ 248 ITR 323 ? 3.The respondent-company (hereinafter referred to as‘company’) was engaged in mining, processing and trading ofminerals. During the assessment proceedings for assessment year(for short ‘AY) 2015-16, the company claimed amortization to thetune of Rs.4,70,33,366/- of mining land and lease hold land. TheAssessing Officer (for short ‘AO’) vide order dated 31.12.2017rejected amortization stating that the claim was not made in thereturn and in absence of a revised return, it cannot beentertained. The Commissioner of Income Tax (Appeals) videorder dated 23.03.2018 confirmed the dis-allowance and held thatif in absence of the revised return the AO cannot allow the claimand similar would be the position of the first appellate authority.The tribunal in appeal filed by the company without dealing withthe issue of amortization allowed the depreciation for the amountclaimed as amortization. 4.Learned counsel for the revenue submits that there was noground raised before the tribunal for claiming depreciation. Inabsence of the ground or an additional ground permitted to beraised, the tribunal erred in allowing the depreciation for theamount claimed as amortization. The contention is that in the case of company in D.B. Income Tax Appeal No.146/2016(Rajasthan State Mines & Minerals Ltd. Vs. Assistant Commissioner of Income Tax) decided on 13.12.2017, theissue of amortization was decided in favour of the department.Reliance is placed upon decision of the Supreme Court in Goetze (India) Ltd. Vs. Commissioner of Income Tax reported in(2006) 284 ITR 323 to argue that in absence of revised returnfiled claiming depreciation the claim could not have been allowed.Relying upon Division Bench decision of this Court inCommissioner of Income Tax Vs. Pratap Singh reported in(1987) 164 ITR 431 (Raj.) it is argued that in absence of theleave by the tribunal, the ground could not have been raised. 5.Learned counsel for the respondents relying upon decision ofthe Supreme Court in National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax reported in (1998) 229 ITR383 (SC) contended that the additional ground can be raisedbefore the tribunal and the deduction which is allowable shouldnot be denied. 5.1. Reliance is placed upon decision of the Bombay High Court in Commissioner of Income Tax Vs. Pruthvi Brokers &Shareholders reported in (2012) 349 ITR 336 and DivisionBench of Punjab & Haryana High Court in M/s VMT Spinning Co. 5.Learned counsel for the respondents relying upon decision ofthe Supreme Court in National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax reported in (1998) 229 ITR383 (SC) contended that the additional ground can be raisedbefore the tribunal and the deduction which is allowable shouldnot be denied. 5.1. Reliance is placed upon decision of the Bombay High Court in Commissioner of Income Tax Vs. Pruthvi Brokers &Shareholders reported in (2012) 349 ITR 336 and DivisionBench of Punjab & Haryana High Court in M/s VMT Spinning Co. Limited Vs. The Commissioner of Income Tax reported in(2016) 389 ITR 326 to argue that under Rule 11 of the IncomeTax (Appellate Tribunal) Rules, 1963, the additional ground can beraised with the leave of the tribunal. 6.It is an admitted fact that the amortization of mining leaseand lease hold land was not claimed in the return but during theassessment proceedings the deduction was sought. The AOrejected the claim for non filing of a revised return, similar was the stand of the First Appellate Authority. The issue before thetribunal was as to whether amortization could have been claimedwithout filing the revised return. 7.The question that the assessee cannot claim amortization ofmining lease and lease hold land was decided inter-se the partieson 31.12.2017 for AY 2010-11 by the Division Bench of this Courtin the case of Rajasthan State Mines & Mineral Ltd. (supra).In that very year, it was also decided that the license for use ofland for mining is an intangible asset and the assessee is entitledfor allowance of depreciation. 8.The pin pointed issue is as to whether in the facts andcircumstance of the case the tribunal was justified in allowing thedepreciation in absence of basic facts. 9.Before proceeding further it would be relevant to reproduceRule 11 of the Rules:- “Grounds which may be taken in appeal 11.The Appellant shall not, except by leave of theTribunal, urge or be heard in support of any ground notset forth in the memorandum of appeal, but the Tribunal,in deciding the appeal, shall not be confined to thegrounds set forth in the memorandum of appeal or takenby leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision onany other ground unless the party who may be affectedthereby has had a sufficient opportunity of being heard onthat ground.” 10.As per Rule 11 of the Rules no additional ground can beraised before the tribunal except by leave of the tribunal. While deciding the appeal the tribunal shall not be confined to thegrounds taken in appeal or raised by leave of the tribunal. Theproviso stipulates that before taking decision on any ground notraised in appeal or additional ground, the affected party is to begiven sufficient opportunity of hearing. 11.In view of the judgments cited of the Supreme Court inNational Thermal Power Co. Ltd. (supra), Punjab and HaryanaHigh Court in M/s. VMT Spinning Co. Limited (supra), BombayHigh Court in Pruthvi Brokers & Shareholders (supra), there isno quarrel with the proposition that the additional grounds can betaken before the tribunal. 12.The issue that needs determination is whether additionalground raised in course of the arguments can be considered anddecided without the other side having an opportunity to raise theobjection for raising of such ground and to oppose it on merits. 13.The decision of this court dated 13.12.2017 in case ofpetitioner relied upon by tribunal was rendered during pendency ofthe appeal before CIT(A) but this issue was neither raised asground or additional ground before the CIT(A) nor the tribunal. 14.It is neither the case of the company that a leave wasgranted by tribunal nor there is whisper in the order of thetribunal that the additional ground raised during the course of thehearing was allowed and considered after providing an opportunityto the revenue. 12.The issue that needs determination is whether additionalground raised in course of the arguments can be considered anddecided without the other side having an opportunity to raise theobjection for raising of such ground and to oppose it on merits. 13.The decision of this court dated 13.12.2017 in case ofpetitioner relied upon by tribunal was rendered during pendency ofthe appeal before CIT(A) but this issue was neither raised asground or additional ground before the CIT(A) nor the tribunal. 14.It is neither the case of the company that a leave wasgranted by tribunal nor there is whisper in the order of thetribunal that the additional ground raised during the course of thehearing was allowed and considered after providing an opportunityto the revenue. 15.In National Thermal Power Co. Ltd. (supra) the SupremeCourt held that there is no restriction in raising a question beforethe tribunal first time so long as the relevant facts are on record.The operative portion of the order is quoted below:- “Under Section 254 of the Income Tax Act, 1961,the Tribunal may, after giving both the parties to theappeal an opportunity of being heard, pass such ordersthereon as it thinks fit. The power of the Tribunal indealing with appeals is, thus, expressed in the widestpossible terms. The purpose of the assessmentproceedings before the taxing authorities is to assesscorrectly the tax liability of an assessee in accordancewith law. If, for example, as a result of a judicial decisiongiven while the appeal is pending before the Tribunal, it is-found that a nontaxable item is taxed or a permissiblededuction is denied, we do not see any reason why theassessee should be prevented from raising that questionbefore the Tribunal for the first time, so long as therelevant facts are on record in respect of that item. We donot see any reason to restrict the power of the Tribunalunder section 254 only to decide the grounds which arisefrom the order of the Commissioner (Appeals). Both theassessee as well as the Department have a right to file anappeal/cross-objections before the Tribunal. We fail to seewhy the Tribunal should be prevented from consideringquestions of law arising in assessment proceedingsalthough not raised earlier.” (emphasis) 16.The basic fact for AY in question with regard to the claim ofamortization being made by the company on the mining land andlease hold land was not before tribunal. The tribunal left the issueof amortization unconsidered and allowed the amount of amortization to be treated as depreciation and to be deductedunder Section 32 of the Act. The procedure adopted by thetribunal denied the revenue a reasonable opportunity to raiseobjection with regard to raising of an additional ground or tooppose it on merits. The argument raised by company during thecourse of hearing was accepted, without testing it on the factsavailable before the tribunal. 18.The appeal is allowed. Substantial question of law isanswered in favour of the revenue. (MANEESH SHARMA),J (AVNEESH JHINGAN),J Monika/Seema/75 Reportable:Yes